The firm’s new guide for video game studios focuses specifically on common mistakes that could be avoided if addressed sufficiently early in their activities:
- 1. Forgetting the copyright of all game elements ;(
- 2. Calculating and paying royalties for publishing contracts
- 3. Video game studios: Choosing the wrong partners, forgetting the shareholder agreement
- 4. NDAs (Non-Disclosure Agreements) & Confidentiality
- 5. Developing a game: What is the status of workers?
- 6. Developing a game: Negotiating participant compensation
- 7. Music and video games: Beware of copyright and the SACEM (French Trade and Companies Register)
- 8. Late compliance with GDPR and personal data obligations
- 9. Standard templates rather than expert advice: the experience of dozens of clients
- 10. “Work Work”: Preparing nothing but the final product
With its expertise in digital and video game law, the firm assists developers and publishers in securing their projects, particularly in matters of intellectual property, rights assignment contracts, confidentiality agreements, and regulatory compliance.
This practical guide helps studios avoid pitfalls related to copyright management, contract negotiation, partner selection, and personal data protection, to ensure the smooth and long-term exploitation of their creations. With this resource, PCS Avocat offers its experience to professionals to prevent legal risks and optimize the success of their video games.
Forgetting the copyright of all game elements ;(
A video game is legally a complex work, assuming that all of its elements are subject to copyright protection and the provisions of the Intellectual Property Code.
Consequently, any video game studio beginning the development and/or/then exploitation of a video game without having planned and controlled the transfer of copyright of the various participants, whatever their status, exposes the studio to major legal risks.
In the absence of a clear and written assignment, authors—employees, contractors, freelancers, and interns—retain their rights to their creations (code, graphics, music, and scenarios), which can lead to obstacles in the commercial exploitation of the game.
The studio then risks infringement actions, distribution bans, and even claims for damages. This situation can compromise the game’s promotion, hamper partnerships, and jeopardize the studio’s financial sustainability. To fully secure your project, it is therefore essential to include specific copyright assignment clauses in contracts from the outset, benefiting the studio.
Calculating and paying royalties for publishing contracts
Financially, publishers often offer contracts that include full control of financial flows from a foreign country under foreign law. These include numerous formulas that allow them to practically define the amount they would be entitled to remit to you, after a variety of charges and elements that could be detrimental from a financial perspective.
Various charges specific to the publisher allow them to sometimes considerably delay the payment of any royalties to the studio. A discussion on the common concept of “net income,” used to calculate your compensation, is necessary to limit the inclusion of the publisher’s personal or even discretionary costs that would limit the studio’s balance, with, in some cases, prior approval for certain expenses.
Video game studios: Choosing the wrong partners, forgetting the shareholder agreement
When several professionals join forces to create a video game, this union can take several forms, each with its own advantages. This analysis must be considered in the short term—usually the production of the game—but also in the medium and longer term. A variety of questions then arise, which are nevertheless essential and must be considered as early as possible:
- Will the studio focus solely on developing its own games, or will it provide its specialized services and expertise to partner or competing studios?
- Will the business model require fundraising? If so, how can investors be brought into the studio?
- How will the development of the first game be financed? Will the partners be able to maintain employment contracts elsewhere, or must they focus exclusively on the studio?
- Are the people involved in the project expected to become partners?
Three elements can guide the discussion: What is the project that motivates the potential partners? What do they bring, respectively and cumulatively, to the project in the short, medium, and long term? What are the different possible development and growth scenarios?
The shareholders’ agreement is a complementary document, separate from the bylaws, which aims to frame and clarify the answers to all of these questions. Properly prepared and drafted, they allow partners to work with confidence and to indirectly anticipate a wide variety of situations or difficulties they may encounter during their activities.
NDAs (Non-Disclosure Agreements) & Confidentiality
The game’s pre-production and production periods often require studios to share sensitive information related to their project with investors, potential partners, or technical service providers on whom they depend for the creation of the video game.
The same is true when the studio searches for a publisher, which may require them to present numerous elements of the game or its business model. Presentations and transfers of information must be governed by confidentiality: hence the famous NDA (Non-Disclosure Agreement).
Without an NDA, sensitive information related to game development—such as concepts, source code, designs, or business strategies—has no contractual protection against unauthorized disclosure or use by partners, service providers, or collaborators.
This can lead to the leakage of innovative ideas, the project being copied by competitors, or conflicts that are difficult to prove in court. Furthermore, without written proof of a confidentiality agreement, the studio loses a key lever to assert its rights and obtain compensation in the event of damages.
Poorly prepared or unreviewed agreements will have equally damaging economic consequences:
Loss of exclusive rights and leakage of sensitive information (concepts, source code, game mechanics), copying or misappropriation of the project
Loss of business opportunities due to a deterioration in negotiations with partners, investors, or publishers.
Costs related to litigation.
Damage to reputation
Developing a game: What is the status of workers?
When the development of a video game is led by several people, supervising the work of the teams interested in participating in the project is essential. Indeed, depending on the type of relationship and the individuals’ investment, their status and contract will be profoundly different, with significant economic repercussions.
Partners or service providers. If the individual wishes to be involved on a long-term basis, they can be integrated as a shareholder/partner of the company, implying a clear agreement on their involvement throughout the project and the company’s ongoing activities.
If, on the other hand, the individual only wishes to participate partially or for the duration of a single project, a “labor” contract should be preferred, either in the form of an employment contract or a service contract. The distinction is significant: the former places all employer and social security costs on the company, while the latter allows for much greater and potentially more organizational freedom compatible with the individual’s other activities.
These two options do not preclude the possibility of offering, in addition to compensation, a profit-sharing option in the operation of the game or the company, often in the form of stock warrants.
Volunteering & Internships. If practiced, volunteering is not a viable option, as it is accepted in companies only under very strict conditions and raises intellectual property issues.
Internships can also be considered, which requires a tripartite contract with the involvement of a university, the review of whose clauses must also be carefully verified.
Developing a game: Negotiating participant compensation
When negotiating the compensation of their service providers, video game studios run the risk of committing to excessive costs, particularly when services are billed at a high rate coupled with royalties on game sales or shares in the company. Without a rigorous assessment of the true value of the work provided, these agreements can weigh heavily on the project’s profitability and dilute the studio’s control. It is therefore essential to carefully assess the consideration for any long-term concession, analyze the service provider’s real financial needs, and adopt a balanced approach.
Transparent and strategic negotiations help avoid disproportionate commitments that could compromise the studio’s economic viability and governance. A variety of mechanisms are possible to compensate those involved in the creation of a video game. Too often, studios happy to benefit from external expertise that is important or essential for their game offer shares in the company or royalties on the exploitation of the video game.
Music and video games: Beware of copyright and the SACEM (French Trade and Companies Register)
An important, even essential, element of the majority of contemporary video games, regardless of their media, music benefits from a specific copyright protection regime, independent of that of the software and other elements of the video game. Even when integrated into the game, its use confers copyright on the composer.
However, it is common for studios to neglect any verification or contractual framework for the use of music.
Without a contract providing for the conditions of transfer or license of musical rights, the list of which must be precise and exhaustive, the studio will not hold the rights necessary to exploit the music, and may at any time be subject to infringement actions by the authors or their beneficiaries.
Recent years have seen a growing involvement of SACEM, the collective management society for the majority of French artists, whose consent is required for any exploitation.
Music law disputes are costly and can tie up many resources that would otherwise be usefully focused on more relevant aspects of the studio.
Late compliance with GDPR and personal data obligations
Mandatory regulation affecting all commercial companies, the GDPR or General Data Protection Regulation requires the implementation of a certain number of procedures and documents, failing which civil and criminal sanctions are incurred: processing register, data protection impact analysis, transfer supervision, etc.
The data controller must establish procedures for requesting access to, removal of, or modification of data from data subjects. The controller must also provide them with certain information: the legal basis for processing, the data retention period, the identity of the data controller, etc.
Ensuring compliance for a video game studio upfront is much simpler and therefore less costly than once operations have been launched, or worse, when a request is made by any interested player, authority, or third party.
Compliance checks are systematic, particularly when mobile games are released online via the Apple, Android, and Steam platforms, requiring mandatory documents and answers to a number of questions about these regulations.
In 2022, Voodoo gaming studio was fined €3 million for violating GDPR, particularly regarding the terms of use of player data for advertising purposes.
Standard templates rather than expert advice: the experience of dozens of clients
This advice is straightforward, but all of the points mentioned above can be addressed with professional support. Often overlooked, lawyers with extensive experience in the sector can offer advice reinforced by years of practice and past experience assisting other studios in different or similar situations.
Industry professionals, such as lawyers specializing in digital law, offer major advantages over using contract templates found online or copied from third parties. Indeed, video game law is a complex and constantly evolving field, combining intellectual property, labor law, data protection, and industry-specific regulations.
A lawyer understands these specificities, adapts contracts to your project and your specific situation, and anticipates the legal risks specific to your business. This ensures optimal protection, rigorous legal compliance, and effective prevention of costly litigation—something no generic model can provide.
“Work Work”: Preparing nothing but the final product
The final common mistake of many video game studios is the lack of time devoted to their studio’s preparation and strategy, which always works against them. While most resources are focused on meeting delivery deadlines for the creation of the video game, all the issues related to its operation, user control, and marketing strategies must also be anticipated:
Contracts do not always provide for the assignment of rights for secondary exploitation (derivative products, adaptations), which can lead to future conflicts.
International competition requires a good understanding of copyright differences (particularly the American “work made for hire” system) to avoid a competitive disadvantage.
Indeed, the life of a video game includes several stages, each of which reveals specific issues, the legal treatment of which provides an effective response: pre-production, production, initial and derivative exploitation, updates, etc.
